In early December, a bombshell dropped onto one of the fastest-growing file-swapping communities online, where Nikolai Nolan has made his home for the last several years.

Nolan, a 22-year-old student at the University of Michigan, is one of the leaders of Anime-Faith, one of hundreds of groups that take Japanese cartoons, translate and subtitle them in English, and release them freely on the Net.

For years this "fansubbing" community has believed that Japanese animation studios tacitly condoned their online activities, at least as long as the shows hadn't yet been released in the United States. But in early December, a studio called Media Factory began sending letters to a handful of big anime fan sites ordering them to stop distributing or linking to copies of its works online.

News.context

What's new:
Big anime fan sites are being orded to stop distributing and linking to copies of the popular Japanese cartoons.

Bottom line: The role of the anime fan communities has become a critical factor in the success of some media companies--and a thorn in the sides of others.

News of the letters helped splinter Anime-Faith and triggered an impassioned debate across the broader community. Some people wanted to stop translating and distributing Media Factory's works immediately, respecting the studio's request. Others argued that the studio hadn't sought out the actual groups doing the translating, and so might still turn a blind eye to their work.

"We decided we should still promote the series," said Nolan, whose group is continuing its translations. "If we receive a letter ourselves, then we'll stop."

With echoes of Hollywood's recent attack on mainstream film-swapping, the Media Factory episode has shaken the complacency of the fast-growing anime file-swapping community. But the event is also triggering broader discussions over the role of the Internet fan communities that have become such a critical factor in the success of some media companies and a thorn in the sides of others.

Hard numbers are always hard to come by. But on one of the most widely used hubs for swapping, which uses the BitTorrent file-distribution technology, more than 120,000 anime cartoon episodes are downloaded a day using the site's tools alone. That amounts to more than 90 terabytes of data a day, the site's statistics show. (For comparison purposes, that's the equivalent of about 22 million MP3 songs.)

But as the Anime-Faith debate showed, this is a very different kind of file-swapping community than the average group downloading the latest Usher song.

Fans of anime--Japanese cartoons that range from the simplicity of Speed Racer to the complex art and storytelling of the more recent film-length "Spirited Away"--are notoriously passionate about their hobby. The borrowed Japanese word "otaku" describes the kind
of obsessive fan who can describe in detail the plot threads of series that last for dozens or hundreds of episodes, and can discuss animators' resumes like baseball fans do batting averages.

The culture has its roots in the early 1980s, when few anime series were available in the United States and small groups would meet in college dormitories to watch much-copied videotapes of shows impossible to see any other way. The Internet, and particularly the powerful BitTorrent file-trading software, has now allowed those little fan groups to expand exponentially, giving them access to thousands of episodes at the click of a mouse.

"There's no gray area...It is technically illegal."

--David Williams, producer ADV Films

Anime-Faith is a good example of how one of these modern groups works. It has translators, editors, typesetters for the subtitles, encoders who digitize the video, quality checkers and more, with a product flow as efficient as a professional operation.

Most groups like this fervently believe they are supporting the cause of anime by allowing fans to see otherwise unavailable titles, and building awareness of shows that would otherwise be unknown before their U.S. release. Most take their "fansubs" out of circulation when an American company licenses a title for distribution in the United States.

The only problem is that it's not technically legal.

Fan base growing, but sales flat
"There's no gray area," said David Williams, a producer at ADV Films, one of the largest distributors of Japanese animation DVDs and merchandise in the United States. "It is technically illegal. When we announce a title, if there is a site that is distributing fansubs, then we contract them and ask them to remove it."

ADV is one of the most adamant of the U.S. distributors. Other smaller houses privately say they recognize the promotional value of the online distribution, which can help boost sales for top titles. But there's also a potential downside.

One executive who asked not to be named said the last two years have seen a significant shift in sales patterns. Top titles still sell well, but the middle categories that used to sell respectable numbers of copies are "being forgotten," he said.

In part, this may be because distribution of anime has exploded alongside its online fan base. Many more titles are now being licensed and distributed every year. Anime is widely shown on the Cartoon
Network, and even has its own Anime Network on cable TV.

But even with this new interest, sales of DVDs--which amount to about 5.7 million copies a year, according to internal industry estimates--are holding steady or dropping. Companies worry that the easy prerelease availability of fansub versions means that the otaku class has already seen their products, and no longer need to buy anything but the must-haves.

The result has been growing anxiety in the industry, although little in the way of direct action. Anime distributors don't have the financial resources for protracted copyright lawsuits, and for the most part, the fan communities are diligent about pulling down titles once they are licensed for distribution, leaving American companies diminished ground for legal action.

"I think there are some Japanese companies that really appreciate fansubbing."

--Nikolai Nolan, student, University of Michigan

"We certainly haven't prosecuted anybody doing the file sharing," said Chad Kime, director of marketing for Geneon Entertainment, another prominent distributor. "Officially, we don't condone the activity. We do admire their enthusiasm and love for our products, and we're grateful when 90 percent of the fansubbers, once they know titles are licensed, do pull them from the Internet."

That leaves the ball in the original Japanese studios' court, and except for Media Factory, it's not obvious what they think of their English-speaking online fans. Nolan said the directors are well aware that their titles are being translated and distributed here, however.

He pointed to the recent final episode of a series called "Battle Programmer Shirase," in which the director included an apology for having to end the series, addressed to "those who enjoy the show on TV, and to those outside the broadcast area who took special measures to watch the show on their PC monitors, and to everyone who watched it subtitled overseas without permission."

"Nobody expected Media Factory to send the letter to everybody, but I think things will go on pretty normally," Nolan said. "I think there are some Japanese companies that really appreciate fansubbing."